Analysis of multi-stage production/inventory system with an acceptable response time

This paper describes a method to decide the inventory levels of semifinished and finished products so as to realize the target service rate by shipping the finished products within a specified time which we call the acceptable response time. We analyze the substitution relation between the acceptable response time and the inventory levels of semifinished and finished products. As a result, inventory levels required according to the length of the acceptable response time under the condition of satisfying the target service rate are obtained. The validity of our method is also demonstrated through simulation experiments with the conditions given by the analysis.     

Joint shipment consolidation and inventory decisions in a two-stage distribution system

This study is motivated by a problem that an industrial distributorship faced while distributing automotive spare parts to service and repair centers. Considering the problem encountered, we present an analytical model for joint inventory and shipment consolidation decisions in a two-stage distribution system with a single distribution center, multiple non-identical retailers, and an outside supplier. The retailers face stochastic end-customer demand and use continuous review to replenish inventories. On the other hand, the distribution center uses a periodic review policy and employs a time-based shipment consolidation policy to dispatch retailers’ accumulated orders at the end of each consolidation cycle. We present an exact optimization technique to compute the optimal replenishment quantity at the distribution center, order-up-to level at retailers, and a shipment consolidation cycle length to measure the effects of inventory at retailers on the overall performance. Finally, we perform numerical experiments to measure the impact of various parameters on the overall distribution system.     

A near-optimal database allocation for reducing the average waiting time in the grid computing environment

In a grid computing environment, a great many users may access the same database simultaneously. To reduce the average waiting time for all users, a grid designer usually replicates the frequently accessed database among nodes based on the load balance heuristic. On the other hand, users may raise identical queries regarding an issue of interest, e.g., stock information, on a database and each of the queries will be directed to any node having a replica of that database. That is, the same answer will be determined by multiple nodes. Consequently, there exist two shortcomings of poor data sharing and duplicate calculations if the database is not replicated and allocated adequately. In this paper, we aim to minimize average waiting time and try to overcome the two shortcomings by performing database allocation over multiple nodes without any replication. The main idea behind the proposed method is to map the original problem to the Euclidean space Rⁿ and to solve the mapped problem in Rⁿ by a gradient-based optimization technique. The theoretical analyses ensure that the proposed method can converge linearly and achieve near-optimal results.     

Integrated inventory control and inspection policies with deterministic demand

In this paper, we develop integrated inventory inspection models with and without replacement of nonconforming items. Inspection policies include no inspection, sampling inspection, and 100% inspection. We consider a buyer who places an order from a supplier. When a lot is received, the buyer uses some type of inspection policy. The fraction nonconforming is assumed to be a random variable following a beta distribution. Both the order quantity and the inspection policy are decision variables. In the inspection policy involving determining sampling plan parameters, constraints on the buyer and manufacturer risks are set in order to obtain a fair plan for both parties. A solution procedure for determining the operating policies for inventory and inspection consisting of order quantity, sample size, and acceptance number is proposed. Numerical examples are presented to conduct a sensitivity analysis for important model parameters and to illustrate important issues about the developed models.     

Maximizing profits in an inventory model with both demand rate and holding cost per unit time dependent on the stock level

We study an EOQ inventory model with demand rate and holding cost rate per unit time, both potentially dependent on the stock level. The ordering cost, the holding cost and the gross profit from the sale of the item are considered. The objective is to maximize the average profit per unit time. We present the analytical formulation of the problem and demonstrate the existence and uniqueness of the optimal cycle time, giving a numerical algorithm to obtain it. Moreover, we provide two fundamental theoretical results: a rule to check when a given cycle time is the optimal policy, and a necessary and sufficient condition for the profitability of the system. Several EOQ models analyzed by other authors are particular cases of the one here studied. We present some numerical examples to illustrate the proposed algorithm and analyze the sensitivity of the optimal solution with respect to changes in various parameters of the system.     

A study on inventory replenishment policies in a two-echelon supply chain system

Inventory control plays an important role in supply chain management. Properly controlled inventory can satisfy customers’ demands, smooth the production plans, and reduce the operation costs; yet failing to budget the inventory expenses may lead to serious consequences. The bullwhip effect, observed in many supply chain management cases, causes excessive inventory due to information distortion, i.e. the order amount is exaggerated while a minor demand variation occurs, and the information amplified dramatically as the supply chain moves to the upstream. In this paper, one of the main causes of bullwhip effect, order batching, is considered. A simplified two-echelon supply chain system, with one supplier and one retailer that can choose different replenishment policies, is used as a demonstration. Two types of inventory replenishment methods are considered: the traditional methods (the event-triggered and the time-triggered ordering policies), and the statistical process control (SPC) based replenishment method. The results show that the latter outperforms the traditional method in the categories of inventory variation, and in the number of backlog when the fill-rate of the prior model is set to be 99%. This research provides a different approach to inventory cost-down other than the common methods like: information sharing, order batch cutting, and lead time reduction. By choosing a suitable replenishment policy, the number of backorder and the cost of inventory can be reduced.     

Stability condition for m/d/l retrial queuing system with a limited waiting time

A stability condition is derived for a queueing system with a Poisson input with parameter λ and constant service time τ. If the virtual waiting time is less than a constant a, then the demand can be serviced; otherwise, it is repeated in exponentially distributed time or is lost with a probability q >- 0. Translated from Kibemetika i Sisternnyi Anaiii. No. 2, pp. 184–186, March–April, 2000.     

A mixed inventory model with variable lead time and random back-order rate

In this paper, we study the determination of the optimal lead time, reorder point and order quantity considering that the back-order probability of a demand made during a stock-out period depends on the interval from the moment in which the order is placed until the next replenishment. Two models are analysed for the specification of the back-order probability: exponential functions and piecewise constant functions. The distribution of the lead time demand is assumed to be Poisson. An algorithm for the determination of the optimal order quantity, reorder point and lead time is given. A numerical example is presented to illustrate the results.     

An optimization approach for joint pricing and ordering problem in an integrated inventory system with order-size dependent trade credit

Under a business trading environment, it is common for the trade credit to depend on the order size. Therefore, it is important to discuss the single-supplier and single-buyer supply chain problem which includes order-size dependent trade credit. In this study, an integrated inventory model with a price sensitive demand rate, determining jointly economic lot size of the buyer’s ordering and the supplier’s production batch, are developed to maximize the total profit per unit time. An efficient algorithm is provided to obtain the optimal solution, and then numerical examples are presented to illustrate the theoretical results. Finally, the comparison between whether an optimal solution is jointly or independently determined is also provided.     

A general and optimal approach for three inventory models with a linear trend in demand

This study provides a general and simple algorithm to obtain an optimal solution for three inventory models with a replenishment batching policy, production batching policy, and an integrated replenishment/production batching policy in a manufacturing system, under a finite time horizon and linear trend in demand. This study determines the replenishment or production schedule with one general equation for these three problems and provides fully theoretical proofs for relaxing some of the conjectures in previous studies. A general and explicit procedure to derive the optimal solution for these three inventory models is presented, while considering both linearly increasing and decreasing demands. In addition, demonstrations of applicability are performed.     

Simultaneous coordination of order quantity and reorder point in a two-stage supply chain

In this paper, we investigate the simultaneous coordination of order quantity and reorder point in a two-stage supply chain (SC). While coordination of order quantity has received much attention in the supply chain management literature, coordination of the reorder point has been less-studied. The retailer's reorder point has a direct impact on product availability and customer service level (CSL) and therefore has a great impact on SC profitability. Our proposed model adopts a two-stage SC with stochastic demand and lead times over multiple periods. The proposed coordination model assures global optimization of order quantity–reorder point decisions. Using a pricing scheme with a discount factor, we extract conditions in which both downstream and upstream members have sufficient motivation to participate in the coordination scheme. Numerical experiments demonstrate that the proposed model can achieve channel coordination. Results of the modeling and analyses show that coordination of both reorder point and order quantity can lead to increased SC profitability as well as CSL improvement.     

Solving single-product economic lot-sizing problem with non-increasing setup cost,constant capacity and convex inventory cost in O(N log N) time

This paper considers an economic lot sizing model with constant capacity, non-increasing setup cost, and convex inventory cost function. Algorithms with computational time of O(N×TD_N)have been developed for solving the model, where N is the number of planning periods and TD_N is the total demand. This study partially characterizes the optimal planning structure of the model. A new efficient algorithm with computational time of O(N log N) has also been developed based on the partial optimal structure. Moreover, computational study demonstrates that the new algorithm is efficient.     

The EOQ repair and waste disposal model with switching costs

This paper addresses the problem of determining the optimal batch sizes for production and recovery in an EOQ (economic order/production quantity) repair and waste disposal model context. This paper assumes that a first shop is manufacturing new products as well as repairing products used by a second shop. The used products can either be stored in the second shop and then be brought back to the first shop in an approach used to reduce inventory costs, or be disposed outside the system. The works available in the literature assumed a general time interval and ignored the very first time interval where no repair runs are performed. This assumption resulted in an over estimation of the average inventory level and subsequently the holding cost. These works also have not accounted for switching costs when alternating between production and recovery runs, which are common when switching among products or jobs in a manufacturing facility. This paper addresses these two limitations. Mathematical models are developed with numerical examples presented and results discussed.     

Rationing mechanisms and inventory control-policy parameters for a divergent supply chain operating with lost sales and costs of review

We consider a static divergent two-stage supply chain with one distributor and many retailers. The unsatisfied demands at the retailers’ end are treated as lost sales, whereas the unsatisfied demand is assumed to be backlogged at the distributor. The distributor uses an inventory rationing mechanism to distribute the available on-hand inventory among the retailers, when the sum of demands from the retailers is greater than the on-hand inventory at the distributor. The present study aims at determining the best installation inventory control-policy or order-policy parameters such as the base-stock levels and review periods, and inventory rationing quantities, with the objective of minimizing the total supply chain costs (TSCC) consisting of holding costs, shortage costs and review costs in the supply chain over a finite planning horizon. An exact solution procedure involving a mathematical programming model is developed to determine the optimum TSCC, base-stock levels, review periods and inventory rationing quantities (in the class of periodic review, order-up-to S policy) for the supply chain model under study. On account of the computational complexity involved in optimally solving problems over a large finite time horizon, a genetic algorithm (GA) based heuristic methodology is presented.     

Pricing and inventory management in a system with multiple competing retailers under (r, Q) policies

We consider a multi-retailer system operated on an infinite horizon, in which each retailer faces stochastic demand following a Poisson process and adopts a continuous-review (r, Q) policy for replenishing inventory to satisfy customer demand. The system involves decisions of pricing and inventory management with the goal of maximizing profit, which equals the sales revenue minus the purchase and inventory costs. Taking Cournot competition into account, models are formulated to optimize simultaneously the expected sales volumes and (r, Q) policies of all retailers. An efficient approach is proposed to calculate the approximate inventory cost. Based on this approach, solution methods for centralized and decentralized scenarios are developed. A great number of numerical computations are provided to evaluate the efficiency of the solution methods, and their performance in the two scenarios. Moreover, system performance under sequential decisions (first pricing and then inventory management) is also investigated.     

Buffer allocation in unreliable production lines using a knowledge based system

The optimization of production lines performance is a problem of great complexity and, therefore, of significant research interest. The problem may involve the optimization of many conflicting objectives, such as increasing throughput and reducing work-in-process time. The majority of existing studies have used various heuristics and search methods based on operations research. These methods have been proved to be computationally inefficient, especially for large production lines. This paper presents ASBA2, a knowledge based system that determines near optimal buffer allocation plans, with the objective of maximising production lines throughout. The allocation plan is calculated subject to a given amount of total buffer slots, in a computationally efficient way. ASBA2 operates in close cooperation with a simulation method, which provides ASBA2 with performance measures concerning production line behaviour. Moreover, to evaluate results provided by ASBA2, we have utilized an exact numerical algorithm for calculating the throughput of unreliable production lines.     

Modelling and asset allocation for financial markets based on a stochastic volatility microstructure model

On the basis of the market microstructure theory, a continuous time microstructure model is proposed for describing the dynamics of financial markets with stochastic volatility property. From the microstructure model, one may obtain the estimates of two state variables, which represent the market excess demand and liquidity respectively but cannot be directly observed. Based on the indirectly obtained excess demand information instead of the prediction of price, a simple asset dynamic allocation approach is investigated. The local linearization method, nonlinear Kalman filter and maximum likelihood method-based estimation approach for the microstructure model proposed is presented. Case studies on the financial markets modelling and the estimated model-based asset dynamic allocation control for the JPY/USD (Japanese Yen/US Dollar) exchange rate and Japan TOPIX (Tokyo stock Price IndeX) show a satisfactory modelling precision and dynamic allocation performance.     

Cost-oriented task allocation and hardware redundancy policies in heterogeneous distributed computing systems considering software reliability

Task allocation policy and hardware redundancy policy for distributed computing system (DCS) are of great importance as they affect many system characteristics such as system cost, system reliability and performance. In recent years, abundant research has been carried out on the optimal task allocation and/or hardware redundancy problem, most of which took a reliability-oriented approach, i.e., the optimization criterion was system reliability maximization. Nevertheless, besides system reliability, other system characteristics such as system cost may be of great concern to management. In this paper, we take a cost-oriented approach to the optimal task allocation and hardware redundancy problem for DCS, which addresses both system cost and system reliability issues. A system cost model which could reflect the impact of system unreliability on system cost is developed, and by minimizing the total system cost, a satisfactory level of system reliability could be reached simultaneously. In the reliability modeling and analysis of DCS, we take both hardware reliability and software reliability into account. Two numerical examples are given to illustrate the formulation and solution procedures, in which genetic algorithm is used. Results show that based on the developed system cost model, appropriate decision-makings on task allocation and hardware redundancy policies for DCS could be made, and the result obtained seems to be a fairly good trade-off between system cost and system reliability.     

Dynamic workforce allocation in a constrained flow shop with multi-agent system

The present work addresses the problem of real time workforce scheduling in assembly lines where the number of operators is less to the number of workstations.The problem is faced developing a two-steps procedure made of (i) a centralized scheduling based on a constraint optimization problem (COP) for initial operator scheduling, and (ii) a decentralized algorithm performed by a multiagent system (MAS) to manage workers in case of unforeseen events.In the proposed MAS architecture, Agents represent the operators trying to find local assignments for themselves. The system is validated with a simulation model and implemented with a hardware infrastructure in a real assembly line of electromechanical components. The main original contribution of the paper consists in proving – by means of both validation through a simulation model and test in a real assembly line of electromechanical components – that (1) multi-agent systems could be successfully adopted to solve a workforce scheduling problem, and (2) a combined approach consisting of centralized + distributed approach would provide better results compared with the application of one of the two approaches alone.     

An economic manufacturing quantity model for a two-stage assembly system with imperfect processes and variable production rate

This article considers a two-stage assembly system with imperfect processes. The former is an automatic stage in which the required components are manufactured. The latter is a manual stage which deals with taking the components to assemble the end product. In addition, the component processes are independent of each other, and the assembly rate is variable. Shortage is allowed, and the unsatisfied demand is completely backlogged. Then, we formulate the proposed problem as a cost minimization model where the assembly rate and the production run time of each component process are decision variables. An algorithm for the computations of the optimal solutions under the constraint of assembly rate is also provided. Finally, a numerical example and sensitivity analysis are carried out to illustrate the model.